March 31, 2007

The Great Rimpau Medical Co-Op Experiment

One of the ways we're passing the time here at the hospital is watching DVDs of classic TV shows, and today we're watching the Bob Newhart Show. The third season DVD has an episode called "The Great Rimpau Medical Arts Co-Op Experiment," a very funny episode from 1974 which shows the result of the various doctors in the office forming a co-op for medical care between the associates and their families.

The episode starts with Bob complaining that the plastic surgeon on the floor of his office charged him $85 to remove a wart. That got everyone talking about forming a co-op for free medical care. However, as soon as they did, everyone started filling each other's schedules with a never-ending stream of complaints. Bob tries to organize everyone into group therapy, with disastrous results.

It occurred to me while I watched this play out to its comedic conclusion that the episode provides an object lesson in the rationing of services. When a rational basis for regulating the demand for services is removed, the demand increases exponentially. Without that regulating force of money, the demand far outstrips the supply, creating shortages. It shows that money offers an objective control on demand so that the market can have flexibility in increasing supply and benefitting suppliers in a manner that barter simply cannot. Without it, there is no objective way in which to prioritize and ration access to services.

There's a lesson in there for advocates of single-payor systems and nationalized health care, in which decisions on rationing get transferred to the government rather than the consumer or supplier. It's not a direct analogy, but the episode certainly suggests an example for that as well.


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Comments (12)

Posted by Michael Smith [TypeKey Profile Page] | March 31, 2007 3:03 PM

The devastating effects of nationalizing any industry have been so vividly demonstrated on so vast a scale that there can no possible excuse for advocating such a thing. Neither John Edwards nor Hillary Clinton nor anyone else that advocates the nationalization of American healthcare -- and nationalization, meaning total government control over wages, prices, supplies, capacity, etc., is essentially what all of the so-called "single payer" proposals amount to -- no such advocate can claim any reasonable basis for believing their proposals will work

The Soviet Union, Cuba, North Korea, China, England, Canada and many other countries have implemented nationalization of healthcare to varying degrees with disastrous results, with the degree of the disaster matching the degree of nationalization.

In the United States, the partial nationalization of healthcare has already been accomplished through Medicare, Medicaid and a vast array of federal and state regulations controlling what is left of these markets. And the results have been predictable: a drastic rise in prices for medical services and products and shortages of both.

The Clintons and the Edwards aim to finish off this segment of the economy by completely eliminating our freedom of choice and turning all healthcare decisions over to the government. Make no mistake, Clinton, Edwards et al have not the slightest interest in improving healthcare -- what they propose will help complete the destruction of the system -- they are simply interested in extending government’s control over our lives and destroying our freedom to live as we please. If the American people permit this to happen, they will get what they deserve.

Posted by unclesmrgol [TypeKey Profile Page] | March 31, 2007 3:28 PM

Money should equate to work. If it did, I would have no complaint with the Captain's reasoning. But money in our society does not equate to work, because some people in this society do not need to do as much work (in many cases, no work at all) to receive money. I class those people into two areas:
a) The welfare people, and
b) The extremely wealthy.

These two groups have benefits all out of proportion to their actual earning capability; since the game is zero sum, the benefits they are getting come from others who must pay more than their share.

That somebody is the middle class. We are the ones who are too honest to pay our own company for carbon credits. Too honest to claim we can't work when we can. Since our leaders are invariably drawn from (b) (or are quickly coopted into it), there is no incentive to fix the problem; the leaders in group (a) merely have to enlist those in group (b) to keep down the real work generators.

The wealth of our nation is aggregating itself into the hands of just a few individuals. If the trend continues, soon there will be just one individual with all that wealth. We all know who I'm talking about.

I'm fighting the brave fight over here on my Linux box; who will join me?

Posted by [TypeKey Profile Page] | March 31, 2007 3:56 PM

In Communism, everything is free, but not available. In Capitalism, everything's available, but you can't afford it.

I would be most interested in learning more about health care economics as it applies to nurses. It's well known in Canada - although it might just be an urban legend, I've never thoroughly investigated - that you can go to school here for nursing and be offered a job in the States on graduation at $60-80k ... which sure beats having to get two or three part time jobs in Canada to make $40.

So how does all that work? Why isn't America training its own nurses? What makes four years of school worth so much?

Posted by Geoff [TypeKey Profile Page] | March 31, 2007 5:57 PM

I dislike being the bearer of bad news, but we live in a country for whom the attack of 9-11 was insufficient to wake the socialists from their slumber.

The common leftist can't draw a single conclusion from the failure of socialized medicine abroad. He wants to seem intelligent and informed, he is devoted to the abstraction, as communists are wont to be.

Hillary-care is coming. We are as powerless to stop it as we are powerless to stop the folks on the kook left who deny the reality of 9-11.

As usual, conservatives will clean up the mess. It will be difficult, but America will survive the coming Hillary train-wreck.

Posted by cthulhu [TypeKey Profile Page] | March 31, 2007 11:06 PM

I live in California, where there seems someone always is calling for universal health insurance, because people can't afford health care and can't afford insurance premiums.

What nobody seems to want to discuss is that insurance -- if it were 100% efficient, with no overhead or profit -- merely pools costs and divides them differently. If the costs are too high before the cards are shuffled and redealt, how will they not be too high afterwards?

The elephant in the room that nobody wants to talk about is that health costs are too high because they are dispensed by a regulated monopoly, which has suppressed the normal rules of supply and demand.

Normally, if someone heard about a career where you needed an advanced degree but could expect extraordinarily high salaries, people would flock to that type of education until there were sufficient graduates that they needed to compete with each other for "customers". Once this happened, prices would fall and the expectation of high salaries would decline. Over time, the career would command salaries comparable to other careers requiring similar amounts of education.

Politicians would do far more to improve health care in this country if they licensed twice as many MDs per year as they do today -- and knocked off with the "insurance" rhetoric.

Posted by Right2thePoint [TypeKey Profile Page] | March 31, 2007 11:47 PM

Government panels determine how many rooms and other things hospitals should have to meet the needs of their area.

Funny thing is that the experts on the panels determining how many rooms are needed are loaded up with doctors. The fox judging the size of the hen house.

So we end up with emergency rooms that can care for a limited number of people at once. The patient gets to wait an hour or so to see the doctor for maybe at best 8 to 10 minutes and if deemed necessary lays there on the cot for 3 to 6 hours for a room to open up.

While they are staring at the ceiling, others are forced to wait in the another room for their chance to be seen because all the exam rooms are filled.

Meanwhile doc is forced to drink coffee and mint tea when he could otherwise be seeing other people and making more fees for doing so if the bottleneck could be broken.

It is all about the optimization of resource availability or lack thereof to maximize profit.

As someone upthread said, if the med schools would enlarge the class size we would have a different situation.

Instead we have parking lots too small for medical facilities to perpetuate the image that the demigod on the pedestal should be bowed and scraped to since we and our loved ones were blessed with the balm of their attention.

Posted by Dave [TypeKey Profile Page] | April 1, 2007 2:34 AM

I don't like country music, but I don't mean to denigrate those who do. And for the people who like country music, denigrate means 'put down'.
--Bob Newhart

Posted by Michael Smith [TypeKey Profile Page] | April 1, 2007 6:32 AM

jiHymas said:

In Capitalism, everything's available, but you can't afford it.

What we have in the US is not captalism, but the regulatory/welfare state with a few remnants of capitalism. Nevertheless, our economy is producing -- and our citizens are consuming -- some $18,000,000,000,000 worth of goods and services every year.

So what on earth does it mean to say that "everything's available, but you can't afford it"? If that were true, there would be no purchases of anything by anybody. Is that what you actually believe to be the case? That under capitalism, no one purchases anything?

Posted by Michael Smith [TypeKey Profile Page] | April 1, 2007 6:59 AM

A substantial amount of physician time these days is spent on paperwork to comply with government regulations. On average, physicians that agree to treat Medicare patients -- and the number of doctors willing to do so is declining -- these physicians spend just over 1 full day per week, 1 day out of 5, doing paperwork to comply the 156,000 pages of Medicare regulations.

This is just one finding from a 2003 member survey conducted by the Association of American Physicians and Surgeons. Here are some of their findings when they asked doctors and surgeons about dealing with Medicare:

- 33% do not accept new Medicare patients;

- 40% restrict services to all Medicare patients; (Reasons: “billing and regulatory requirements” ranked first, followed by “hassles and/or threats from Medicare carriers/government, “fees too low” & “fear of prosecution or civil actions”)

- 41% have had difficulty finding a referral physician;

- 32% say level of service is less than 5 years ago;

- 22% is the amount of total staff & physician time spent on compliance with Medicare regulations;

- 65% would not take part in Medicare again; Medicare claims cost offices 50% more to process;

- 63% would be more willing to serve Medicare patients with unrestricted private contracting;

- 67% predict more doctors opting out of Medicare;

- 58% predict severely rationed care;

- 36% predict a complete collapse;

- 62% plan to retire at an earlier age than expected 5 years ago; (Reasons: “Increased government interference,” followed by “increased regulatory burden.” Money ranked number six.)

Medicare is driving doctors out of medicine.

Posted by Michael Smith [TypeKey Profile Page] | April 1, 2007 8:26 AM


If you wish to fight what is happening in this country politically, you must be willing to challenge the prevailing notion of morality that makes the politics possible.

I am referring to the notion that one man's “need” gives him a moral right to another man's money or property. That is the underlying moral principle that is used to justify all of today's welfare-state political programs.

And here is the problem: once you have stipulated to the principle that "need" is a valid basis for making a claim on the taxpayer’s money, there is no way to limit what “needs” people can legitimately claim should be satisfied at taxpayer expense.

For decades, Republicans have made the mistake of conceding the principle that “need” is a valid claim to other people’s wealth. Rather than challenge the principle, Republicans always think they can police it so that the taxpayers are only forced to help the “truly needy”. But look at the results.

When Republicans concede that the “truly needy” should not be allowed to starve, but rather should be provided with food stamps, they are then powerless to resist the liberals who say the “truly needy” also need shelter -- isn’t avoiding freezing just as necessary as avoiding starvation? -- and so the Republicans have to agree to public housing. And if food and shelter are legitimate needs, how about transportation -- how are these needy people ever going to work themselves out of poverty without transportation to and from a job? -- and so we must have public transportation. And what about education -- how do you expect the poor to get a job without an education? -- and so we must have public education. And what about medical care -- surely if we can provide food, shelter, transportation and education, we are not going to let them die of disease, are we? -- and so we have Medicaid. And what about the elderly on fixed incomes -- aren’t they in need of cheap healthcare? -- and so we have Medicare.

Do you see how it works? Almost everyone can claim to be in need of something. Farmers “need” stable prices -- so we must have farm supports. Steel workers “need” their jobs -- so we have import tariffs. People “need” a retirement income -- so we must have Social Security. Artists and musicians “need” an income -- so we must have a National Endowment for the arts. Etc, etc, ad nauseum.

Republicans have no chance of stopping this madness until they challenge the basic principle that “need” constitutes a valid claim on the taxpayer‘s money. Even Ronald Reagan was afraid to challenge this principle. In fact, in his famous speech in which he said, “Government is not the solution, government is the problem”, he also specifically said that government would still take care of the needy. In fact, it was Reagan, in this very speech, who introduced the disastrous term “social safety net” for the “needy”.

This was a major mistake because not only did it explicitly concede the liberal’s moral premise that “need” is a valid claim on other people’s money, it concedes a rationalization for that premise -- it concedes the liberal notion that life under capitalism is as risky as trapeze work and that anyone, through no fault of their own, can fall through at any time -- ergo, we must have a governmental safety net.

Incidentally, Reagan paid the usual price for conceding this principle -- the federal government continued to grow unabated and, in fact, spending on “social programs” doubled during Reagan’s eight years in office, despite all the hysterical liberal screaming about his “budget cuts”.

To stop America’s slide into socialism, we must challenge this moral principal and reject it. No amount of “need” of any sort gives one man the right to another man’s money. No one has ever provided a reason why “need” should supercede all other rights and negate a man’s right to his own property -- and no one can, for nothing justifies such a notion.

A man in need has only the right to ask for help; he must depend on the voluntary charity of others. He does not have the right to force others to help. And the decision whether or not to help one’s fellow man must be an individual decision. No one has the right to decide, for me, whether or not a particular person is worthy of my help or whether or not I am in a particular position to offer that help. Only I can decide such things for myself.

The proper moral principle here is that money belongs, not to any stray stranger who claims to need it, but to the man who has earned it or otherwise acquired it voluntarily from others. It is immoral to take it from him by force -- no matter what one proposes to do with it. A robbery is immoral, no matter what the thief plans to do with the proceeds -- and having the government doing the robbing in an organized fashion through taxation does not alter the immorality of the act.

There was a time when the majority of the American people understood this principle and detested those parasites who wish to exist at the expense of others. Decades of education under a leftist/liberal dominated education system has changed that -- and now the parasites are so large in number they can elect more liberals to create still more programs for still more parasites. However, the hosts -- the taxpayers -- cannot support an infinite number of parasites; sooner or later, they will revolt.

Posted by kb [TypeKey Profile Page] | April 1, 2007 8:44 AM

Of course you have great taste in DVDs.

The story reminds me of the DC Babysitting Coop that my teacher Dick Sweeney and his wife wrote around that same time. The coops seldom work, even when economists try to design them. In this particular case, there was no mechanism that made the cost of an additional medical procedure greater than zero to the patient, so all it did was remove the third-party payer. (The original system was better since Bob had to decide if he preferred $85 or a wart.)

Is Michael Smith John Galt, by the way?

Posted by Michael Smith [TypeKey Profile Page] | April 1, 2007 9:56 AM

No, kb, just a fan of Galt's trying to get conservatives to realize that the political battle cannot be won when one has conceded the moral battle.

I like your blog, by the way.